Quest chairman calls for self-regulation of Australian franchise businesses

George Sell George Sell Uploaded 29 July 2019

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Australia: Paul Constantinou, the founder and chairman of Quest Apartment Hotels, is calling on franchisors to back independent reporting of their businesses.

Constantinou said self-regulation using a rating system could help address the issues raised in an Australian parliamentary inquiry into the AUD$170 billion franchising sector.

"Self-regulation is a must, irrespective of whether it is compliant with the law or not," he told the Sydney Morning Herald. "All the compliance issues must be followed. That should be a core business discipline, it shouldn't have to be administered by the Australian Competition and Consumer Commission (ACCC). The ACCC and these panels have been set up because people have dropped the ball."

Constantinou founded Quest 32 years ago and has grown the business to 176 franchised properties across Australia, New Zealand and Fiji. The business turns over more than $400 million a year. In 2017 he sold the majority of Quest to The Ascott Limited for $193 million, but he retains a minority stake.

Quest has implemented FRANdata which measures the performance of business franchise systems across seven performance standards. Constantinou wants other franchises to take up the system, which has just released an Australian Franchise rating scale.

"I would like this to become a standard that there is an accreditation process for franchisors to go through to be assessed by an independent party. Our brand is out there," he said. "If we have franchisees failing, it is hurting our business, it is hurting our equity, it is hurting our capital and our growth. You can't sell a new franchise to someone who just read in the paper that you lost ten."

Constantinou said in the past the Franchise Council of Australia used to provide accreditation for franchisors, which provided assurance of certain standards and disciplines: "At least then people saw you as part of something. I think that's what people want, that other people have done a due diligence on you to a level. That gives you strength as a franchisor to say 'We are a compliant company'. Because the industry has a few bad apples in it doesn’t mean the industry is bad."

 

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